Angel Broking has maintained `Buy` on Graphite India with a price target of Rs 102 in its report dated Feb. 15, 2012. The broking house gave the following rationale:
Graphite India (GIL) announced its 3QFY2012 numbers. The company`s net sales increased by 29.2% yoy to Rs 4.36 billion (Rs 3.37 billion). The graphite segment, which contributed around 85.6% to the total revenue, registered strong growth of 27.1% yoy to Rs 3.73 billion (Rs 2.94 billion), while the steel segment managed a 15.8% yoy increase to Rs 300 million (Rs 260 million). EBITDA increased by 21.1% yoy to Rs 890 million (Rs 730 million), largely due to higher revenue.
EBITDA margin declined by 137 bp yoy to 20.3% (21.7%), mainly due to higher raw-material cost, which increased to 42.6% of net sales in 3QFY2012 vs. 40.2% of net sales in 3QFY2011. PAT increased by 27.1% yoy to Rs 560 million (Rs 440 million). Despite a 137 bp OPM contraction, PAT margin only declined by 21 bp yoy to 12.9% (9.1%) due to lower tax provision and higher other income.
Tax rate declined to 32.1% of PBT in 3QFY2012 vs. 33.2% of PBT in 3QFY2011, while other income increased by 96.8% to Rs 70 million in 3QFY2012 vs. Rs 40 million in 3QFY2011. We will be coming out with a detailed report post management interaction. We continue to maintain our `Buy` view on the stock with a target price of Rs 102.
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